SWX Swiss Exchange and the two ICSDs, SIS SegaInterSettle and Clearstream, have hatched a plan to simplify the cross-border settlement of German mortgage bonds traded at SWX Swiss Exchange.
From this autumn, trades in German mortgage bonds settled between SIS SegaInterSettle and Clearstream will be considered national transactions instead of cross-border trades. Consequently, lower domestic settlement fees will apply.
The new settlement service, which will use the existing STP link between SIS SegaInterSettle and Clearstream Banking Frankfurt, is expected to result in cost reductions for market participants of approximately Euros 10 per trade.
With both ICSDs already approved settlement locations for trades executed on Eurex, the new deal will be seen as drawing the Swiss still closer to the Deutsche Borse grouping. Certainly, the new arrangement will enable market participants to concentrate their holdings with either ICSD.
“Derived from a joint project realised by Clearstream, SIS SegaInterSettle and SWX Swiss Exchange, the new settlement service will be a benefit to the market as a whole,” the three organisations declared in a joint press release. “The implementation of this new process represents a further important step towards reducing the costs involved in crossborder settlement of German mortgage bonds: Indeed, transaction costs will decrease by more than 90 percent. The new solution underpins our goal to cooperate with infrastructure partners in order to render crossborder settlement even more efficient and to generate maximum benefit for our clients.”